US veterans file billion dollar claims against global banks over terrorist financing and sanctions avoidance and claim that the conduct continues today

By Christine Duhaime | November 11th, 2014

Anti-Terrorism Act filing against global banks

Yesterday, symbolically the day before Remembrance Day, several plaintiffs filed suit against a number of global foreign banks based in the United States under the Anti-Terrorism Act (the “ATA“), including HSBC Holdings Plc, Barclays, Standard Chartered Bank and the Royal Bank of Scotland. The plaintiffs are seeking damages that could run in the billions of dollars for alleged acts of terrorism committed by the defendants in Iran and Iraq. The case is Freeman v. HSBC et al. and was filed in New York.

Financial support allegations

The allegations are not specifically that the banks committed direct acts of terrorism; rather that they provided financial support to listed terrorist groups in violation of sanctions laws and counter-terrorist financing laws which were a significant factor in the chain of events that led to the kidnapping and subsequent death and injury of American soldiers in Iraq from 2004 to 20011. In short, the allegations are that but for the alleged provision of financial services to Iranian entities in violation of sanctions law, terrorists would not have been capable of committing acts of terrorism that harmed the plaintiffs.

Allegations that conduct is continuing

According to the complaint, starting in 1987 and continuing today, the defendants are alleged to be conspiring with Iran to alter, falsify or omit information from payment messages (known as “stripping”) that involve Iran or Iranians to ensure the payments are shielded from detection, scrutiny or monitoring by each of law enforcement, regulators and other depository institutions in the US.

In addition to stripping, the plaintiffs are alleged to be converting MT103 SWIFT codes into MT202 SWIFT codes allegedly so that the transmitting bank does not have to disclose the originator, beneficiary and counter-parties of the financial transactions to disassociate the transactions from Iran for sanctions avoidance.

Billions allegedly transferred to Iran

As a result of the  alleged conspiracy, it is alleged that Iran was able to transfer billions of dollars in US currency through the US; transfer to terrorist organizations, millions of dollars used in terrorist acts; and acquire weapons of mass destruction. The funds allegedly enabled terrorist groups to commit acts of international terrorism that caused the death or injuries of the plaintiffs. From 2002 to 2006, at least $100 million allegedly was provided to terrorists through the Bank Melli and $50 million was provided to Hezbollah.

Other banks in the line of fire

The complaint also alleges that other banks aided, and aid, the defendants in the conspiracy to evade US sanctions and they are named as John Doe Banks because through the discovery process of the litigation, their identity will be revealed as financial transactions are traced to Iran.

Such alleged conduct by the alleged defendants are, if proven, acts of terrorism and terrorist financing pursuant to 18 USC §§2331, 2339A, 2339B and 2332d and if proven, will render the defendants liable civilly pursuant to 18 USC 2333(a) of the ATA.

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